AUSTIN, MINN. — Even with significant profit growth during the second quarter, Hormel Foods Corp. acknowledged the impact the ongoing highly pathogenic avian influenza (HPAI) outbreak will have on its parent company Jennie-O Turkey Store as it navigates the rest of 2022.

“Our Jennie-O Turkey Store team is facing an uncertain period ahead,” said James P. Snee, chairman, president and chief executive officer of Hormel Foods. “We are actively managing the impacts from highly pathogenic avian influenza (HPAI) on turkey supply and will take the appropriate actions to protect the health of the turkeys across our supply chain. Similar to what we experienced in 2015, HPAI is expected to have a meaningful impact on industry poultry supplies over the coming months. Beginning in the third quarter, we anticipate large supply gaps in the Jennie-O Turkey Store vertically integrated supply chain, caused by flock losses to date.”

Jennie-O Turkey Store sales were up 16% to $407.3 million. With higher commodity prices and foodservice sales, segment profit also showed a substantial increase of 387%.

For the quarter that ended May 1, net income for the entire Hormel business was $261.6 million, equal to 48¢ per share on the common stock, a 14% increase from the previous year when the company earned $227.9 million, or 42¢ per share.

Sales for the quarter were strong at $3.1 billion, up 19% from $2.6 billion the year prior.

Hormel’s Refrigerated Foods business unit had a sales increase of 13% during the quarter to $1.6 billion. Even with sales going up, volume decreased 13%. Segment profit went up 3% due to strong foodservice business.    

The company also added retail brands like Planters, Skippy, Wholly Guacamole, Spam and Columbus, which helped drive growth during the quarter.

“Consistent with the company’s long-term strategy to better align resources to value-added growth, the overall decline in volume was due primarily to lower commodity sales resulting from the company’s new pork supply agreement,” Hormel said.

Another area the company watched closely during the quarter was managing inflation in all its sectors.

“As we continue to operate in this highly inflationary environment, we will remain focused on improving our supply chain performance, maximizing promotional effectiveness and mix, and where necessary, taking additional pricing actions to mitigate persistent inflationary pressures,” Mr. Snee said.